Saturday, June 1, 2013

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More Monetary Stimulus Soon Beyond Operation Twist Is Unlikely

In its June 19th and 20th meetings, the Federal Open Market Committee discussed the extension of Operation Twist through year-end without much hint of additional monetary stimulus according to the FOMC minutes released today. One member disagreed with extending this program through the year-end with a dissenting vote. In addition, some members noted the risk that continued purchases of longer-term Treasury securities could, at some point, lead to deterioration in the function of the Treasury securities market which could undermine the intended effects of the policy. However, there was a general agreement that such risks were presently low.

The FOMC minutes also showed that strains in the global financial market pose a significant downside risk to the committee’s economic outlook and that fiscal policy continues to act as a drag on economic growth.

Read the minutes.